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What is gold standard forex exchange market?
By Capitalist | February 26, 2009
Gold standards for foreign exchange market reveal a country’s trading specifics in terms of gold. Each country buys or sells gold at a particular currency cost. This differs for each country and hence gold can become a benchmark through which to evaluate the difference in currency pricing of two countries and their ratio.
If you can freely import and export gold, then your country is following the gold standard of forex exchange market. Another eligibility criterion is the fact that your currency shall buy and sell gold at a particular price that shouldn’t be varying till suggested otherwise.
Let’s mull on this: If British imports on Yen is greater than its exports on Yen then demand of Yen will increase and Pound price for Yen will increase further. The Yen paying commodities will find an upward surge and more British pounds will be required to buy those stuffs.
Topics: Foreign Exchange, Gold / Bullion | No Comments »